Tax Competition and Public Input
AbstractThis paper assesses the extent and policy implications of simultaneous competition among countries on both corporate tax rates and the provision of public goods used by firms as production factors (‘public factors’). First, we derive the relevant theoretical results in a unified framework where a corporate tax is used to finance a public good that raises both household utility and firm productivity. Then, the relevance of such simultaneous competition is tested using data on foreign direct investment from the US to EU member states. Both the theoretical analysis and the empirical results presented in this paper suggest that focusing on the tax side of the competition for the location of multinationals is misleading. It shows that there are grounds for the coexistence of high tax/spending countries and low tax/spending ones. Furthermore, provided multinationals are heterogeneous concerning their use of public factors, the competition for attracting them could take the form of a vertical or horizontal specialisation, whereby each government would seek to attract a certain type of activity through the adequate provision of certain public factors. In this framework, international competition could act as a vector for raising public-sector efficiency rather than as a standardisation factor.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Network of Economic Policy Research Institutes in its series Economics Working Papers with number 040.
Length: 24 pages
Date of creation: Oct 2005
Date of revision:
Contact details of provider:
Postal: ENEPRI c/o CEPS Place du Congrès 1 1000 Brussels Belgium
Phone: +32 2 229 3911
Fax: +32 2 219 4151
Web page: http://www.enepri.org
More information through EDIRC
Postal: ENEPRI c/o CEPS Place du Congrès 1 1000 Brussels Belgium
Other versions of this item:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Antoine Bouët & Jean-Christophe Bureau & Yvan Decreux & Sébastien Jean, 2004.
"Multilateral Agricultural Trade Liberalization: The Contrasting Fortunes of Developing Countries in the Doha Round,"
2004-18, CEPII research center.
- Antoine Bou�t & Jean-Christophe Bureau & Yvan Decreux & Sébastien Jean, 2005. "Multilateral Agricultural Trade Liberalisation: The Contrasting Fortunes of Developing Countries in the Doha Round," The World Economy, Wiley Blackwell, vol. 28(9), pages 1329-1354, 09.
- Jean-Christophe Bureau & Antoine Bouet, Yvan Decreux, Sébastien Jean, 2005. "Multilateral agricultural trade liberalization: The contrasting fortunes of developing countries in the Doha Round," The Institute for International Integration Studies Discussion Paper Series iiisdp060, IIIS.
- Alexander Hijzen & Peter Wright, 2005.
"Migration, Trade and Wages,"
2005-06, CEPII research center.
- Lionel Fontagné & Jean-Louis Guérin & Sébastien Jean, 2003.
"Market Access Liberalisation in the Doha Round: Scenarios and Assessment,"
2003-12, CEPII research center.
- Lionel Fontagné & Jean-Louis Guérin & Sébastien Jean, 2005. "Market Access Liberalisation in the Doha Round: Scenarios and Assessment," The World Economy, Wiley Blackwell, vol. 28(8), pages 1073-1094, 08.
- Nanno Mulder & Alexandre Vialou & Beatriz David & Monica Rodriguez & Marta Castilho, 2004. "La compétitivité de l’agriculture et des industries agroalimentaires dans le Mercosur et l’Union européenne dans une perspective de libéralisation commerciale," Working Papers 2004-19, CEPII research center.
- Guillaume Gaulier & Sébastien Jean & Deniz Ünal-Kesenci, 2004. "Regionalism and the Regionalisation of International Trade," Working Papers 2004-16, CEPII research center.
- Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2004. "A Consistent, Ad-Valorem Equivalent Measure of Applied Protection Across the World: The MAcMap-HS6 Database," Working Papers 2004-22, CEPII research center.
- Michel Beine & Agnès Bénassy-Quéré & Hélène Colas, 2003.
"Imitation Amongst Exchange-Rate Forecasters: Evidence from Survey Data,"
2003-08, CEPII research center.
- Michel Beine & Agnès Bénassy-Quéré & Hélène Colas, 2003. "Imitation Amongst Exchange-Rate Forecasters: Evidence from Survey Data," THEMA Working Papers 2003-39, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005.
"Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis,"
Cahiers de recherche
- Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Working Papers 2005-07, CEPII research center.
- Anindya Banerjee & Paolo Zanghieri, 2003. "A New Look at the Feldstein-Horioka Puzzle using an Integrated Panel," Working Papers 2003-22, CEPII research center.
- Todd M. Gabe & Kathleen P. Bell, 2004. "Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 21-41.
- Agnès Bénassy-Quéré & Véronique Salins, 2005. "Impact de l’ouverture financière sur les inégalités internes dans les pays émergents," Working Papers 2005-11, CEPII research center.
- Pantelis Kammas, 2009.
"Strategic fiscal interaction among OECD countries,"
EERI Research Paper Series
EERI_RP_2009_11, Economics and Econometrics Research Institute (EERI), Brussels.
- Pedro Gomes & François Pouget, 2008. "Corporate Tax Competition and Public Capital Stock," STICERD - Distributional Analysis Research Programme Papers 096, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Ramona Dumitriu, 2005. "Tax Competition regarding Foreign Direct Investment between Transition European Countries," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 69-74, JUNE.
- Bchir, Mohamed Hedi & Jean, Sebastien & Laborde, David, 2005.
"Binding Overhang and Tariff-Cutting Formulas,"
18873, TRADEAG - Agricultural Trade Agreements.
- Mohamed Hedi Bchir & Sébastien Jean & David Laborde, 2006. "Binding Overhang and Tariff-Cutting Formulas," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(2), pages 207-232, July.
- Guillaume Gaulier & Françoise Lemoine & Deniz Ünal-Kesenci, 2005. "China’s Integration in East Asia: Production Sharing, FDI & High-Tech Trade," Working Papers 2005-09, CEPII research center.
- Neumann, Rebecca & Holman, Jill & Alm, James, 2009. "Globalization and tax policy," The North American Journal of Economics and Finance, Elsevier, vol. 20(2), pages 193-211, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CEPS).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.